Gold sub $3,300 as Trump surprises markets on Friday about talks with China's Xi
- Gold price dips on Friday and looks set to close off this week at a loss.
- China says no trade talks are underway with the US, refuting Trump’s claims of ongoing negotiations.
- Traders appear to be buying into the rumours of a deal, pushing stocks higher and reducing their exposure to Gold.
Gold price (XAU/USD) is seeing more profit taking this Friday, and looks set to close off this week in the red around $3,300 at the time of writing. The move down comes amid increasing confusion on what is the status of the trade conflict between the United States (US) and China, with US President Donald Trump giving the impression that talks are taking place and China denying it.
In early trading on Friday, Bloomberg released a headline that mentioned China is weighing exempting some US goods from tariffs as costs are rising out of control, throwing markets left and right. At the same time, Bloomberg also reported that the country is preparing emergency plans to deal with external shocks with new finance and policy tools.
Daily digest market movers: Trump comments 2.0
- As this Friday further develops, US President Trump said in European trading hours that already 200 trade deals have been made and that Chinese President Xi Jinping has been calling with Trump, Reuters reports.
- After reports from the Swiss National Bank (SNB) booked a 6.7 billion Swiss Francs (CHF) profit on the back of its Gold holdings in the first quarter of 2025, the central bank of Kenya says it is considering adding Gold to its reserves to diversify its foreign-exchange holdings beyond the dollar and other currencies, Bloomberg reports.
- The record-setting rally in Gold and its large intraday moves made waves in China by stoking retail demand, fanning unprecedented trading volumes on the Shanghai exchange and drawing warnings from the authorities, Reuters reports.
- US Treasury Secretary Scott Bessent said the US and South Korea could reach an “agreement of understanding” on trade as soon as next week, Bloomberg reports. More and more headlines on possible trade deal agreements should put downward pressure on Gold.
Gold Price Technical Analysis: Who said what now?
The overheated Gold rally looks to be in need of some further cooling. Traders look to be buying into the rumors that a trade deal between the US and China could come very soon, despite China coming out contradicting those rumors. The risk here could be that markets are misinterpreting the US semantic on whether they are “talking” or “negotiating”, and that no deal is done anytime soon with possibly a revisit to $3,500
Looking at technical levels, the daily Pivot Point at $3,335 is the first upside and intraday level that needs to be reclaimed. The R1 intraday resistance saw a small attempt for a test in very early opening this Friday, coming in around $3,381. Further up, Gold price could extend the rally to the R2 resistance at $3,414, surpassing the $3,400 handle.
On the downside, the S1 support this morning briefly broke, though sees price action now reversing back above it, at $3,302. Further down, the S2 support at $3,256 precedes the technical pivotal floor near $3,245 (April 11 high).
XAU/USD: Daily Chart
Interest rates FAQs
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.
Higher interest rates generally help strengthen a country’s currency as they make it a more attractive place for global investors to park their money.
Higher interest rates overall weigh on the price of Gold because they increase the opportunity cost of holding Gold instead of investing in an interest-bearing asset or placing cash in the bank. If interest rates are high that usually pushes up the price of the US Dollar (USD), and since Gold is priced in Dollars, this has the effect of lowering the price of Gold.
The Fed funds rate is the overnight rate at which US banks lend to each other. It is the oft-quoted headline rate set by the Federal Reserve at its FOMC meetings. It is set as a range, for example 4.75%-5.00%, though the upper limit (in that case 5.00%) is the quoted figure. Market expectations for future Fed funds rate are tracked by the CME FedWatch tool, which shapes how many financial markets behave in anticipation of future Federal Reserve monetary policy decisions.
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Author
Filip Lagaart
FXStreet
Filip Lagaart is a former sales/trader with over 15 years of financial markets expertise under its belt.
